Ms Z Blackledge v Anderton Enterprises Ltd: 2414315/2019

EMPLOYMENT TRIBUNALS

Case No 2414315/2019

Between

Ms Z BlackledgeClaimant

Anderton Enterprises LtdRespondent

Before

Employment Judge Holmes

In person for claimant

Date 13 August 2020

JUDGMENT

ON RECONSIDERATION AND CASE MANAGEMENT ORDERS It is the judgment of the Tribunal that : The rejection of the respondent’s response on 17 January 2020 is reconsidered and revoked. The respondent’s response is accepted out of time , the respondent may respond to the claims , and participate in the hearing of the claimant’s claims. Note Reasons for the judgment having been given orally at the hearing, written reasons will not be provided unless a request was made by either party at the hearing or a written request is presented by either party within 14 days of the sending of this written record of the decision. CASE MANAGEMENT ORDERS AND NOTICE OF HEARING

[1]The hearing of the claims be postponed to be heard by any Employment Judge sitting alone on 5 June 2020 at Manchester Employment Tribunal , Alexandra House, 14-22 The Parsonage, Manchester, M3 2JA at 10.00 a.m. for three hours.

[2]The respondent shall by 14 February 2020 provide to the claimant (but not the Tribunal) copies of all documents relevant to her claims.

[3]The claimant shall by 28 February 2020 provide to the respondent (but not the Tribunal) copies of all documents relevant to her claims.

[4]The claimant shall prepare a bundle for the further hearing. This is to be prepared by the claimant and sent to the respondent by 13 March 2020 , and agreed by 20 March 2020.

[5]The parties shall exchange witness statements , on the same day , by 24 April 2020.

[6]It is recorded that the Issues to be determined will be: a) What was the relevant leave year for the purposes of calculating the claimant’s entitlement to pay in lieu of untaken annual leave at the date of termination of her employment on 27 August 2019? b) In particular, can the respondent show that there was a relevant agreement , satisfying the definition in Reg.2(1) of the Working Time Regulations , whereby the claimant’s annual leave year, in accordance with Reg13(3), ran from 1 August to 31 July ? c) If the leave year was from 1 August to 31 July , can the claimant carry over unused annual leave entitlement from one leave year to the next ? d) What is the appropriate daily rate at which pay in lieu of annual leave should be paid ? e) Has the respondent, on its own case, paid the correct sum in lieu of unused leave on termination ? f) If the respondent has overpaid, can it recoup any overpayment from any award the Tribunal may make?

REASONS

[1]In this case the claimant has brought a claim in respect of unpaid pay in lieu of untaken annual leave arising out of the termination of her employment with the respondent on 27 August 2019. The respondent did not submit a response within the prescribed time limit, and a subsequent response was rejected as having been filed out of time. The respondent , however, attended this hearing, in the person of Mr Miller, a director, who made a successful application for the response to be accepted out of time. Reasons for that judgement were given at the time, and no request was made for written reasons. If either party requires written reasons they must make the appropriate application within 14 days of sending of this judgement and orders. Consequently , the respondent may participate in these proceedings, and the Employment Judge went on to consider whether the claim could be heard.

[2]The essence of the dispute relates to how the claimant’s annual leave year should be reckoned. The claimant’s claim is based upon the holiday entitlement that she accrued during the whole of the 10.5 months of her employment. She produced calculations in support of that claim, which allowing for the sum of £146 paid by the respondent, produced a claim on her case of £661 (or thereabouts).

[3]The respondent’s case is that the holiday year is not to be taken from the date upon which the claimant started work, which is the default position under regulation 13 of the Working Time Regulations, but that the provisions of the claimant’s contract of employment operated to provide that the holiday year ran from 1 August to 31 July. The claimant cannot , the respondent contends, and the claimant agrees, carry over untaken annual leave entitlement from one leave year to the next. As the claimant took no paid holiday during the whole of her employment, if this contention is right , then she loses the right to be paid in lieu of untaken annual leave when she starts the next leave year. She will then, of course, have accrued further annual leave entitlement, in respect of which the respondent contends the claimant has been paid, in fact overpaid.

[4]Mr Miller produced to the Tribunal (in fact he sent it in with the response form) a document entitled Workplace Alcohol and Drugs Policy, which comprises of some five pages, the last page of which has a number of signatures including the claimant’s , and the date of 9 August 2019. The Employment Judge discussed this document with him, and asked if this was the agreement upon which he wished to rely, pointing out that it did not appear to be an agreement but a policy, and may therefore may not satisfy the requirements of the Regulations. Mr Miller was of the view that upon induction the claimant would have been provided with a contract of employment and believe that there may be another document which would satisfy the requirements of the Regulations. It is also to be noted that on the respondent’s case at present, if this document is alleged to constitute a relevant agreement, it was not made until 9 August 2019, and under its own terms, any variation would be on 12 weeks notice. That begs the question of whether, and if so when, the respondent could vary any contractual terms as to the annual leave year without the requisite notice, which on its own document, appears to be 12 weeks. Those, however, are issues for the respondent to consider.

[5]Further the respondent’s general manager Dave Cottam was unable to attend the hearing , but had provided a statement. It may well be the case that he would be required to give evidence about the contractual arrangements made with the claimant.

[6]In the circumstances Mr Miller sought a postponement, in order to assemble the necessary evidence. The claimant did not object to that application, and the Employment Judge granted it.

[7]The Employment Judge did observe how it was regrettable that the parties were in dispute , and could not resolve a claim involving a relatively modest sum of money. He suggested that they may wish to discuss settlement, which they duly did, but to no avail.

[8]In those circumstances, whilst it does seem highly disproportionate, the Tribunal postponed the hearing of the claimant’s claim, and has made case management orders so the parties can be fully prepared on the next occasion. Further , the Employment Judge has set out what he understands to be the issues to be determined by the Tribunal at the next hearing.

[9]The claimant may also wish to recalculate her claim as it appeared to the Employment Judge that she had taken an average over the entire period of her employment, when it was his understanding that the relevant period would be the last 12 weeks of her employment, provided that she worked in each of those weeks. If, however she did not, she may be entitled to go further back until she has a requisite period of 12 weeks during which she worked. This may, of course, affect her calculations, but she can address this before the next hearing.

[10]For the respondent, Mr Miller raised the question as to whether if the claimant had been overpaid (which the respondent apparently considers she has) the respondent could recoup any such payment. The Employment Judge did not consider this would be possible, other than by way of set-off against any award the Tribunal may make. It would seem , however, unlikely, if theoretically possible, for the Tribunal to find that the claimant’s claim succeeds in respect of the previous period of annual leave entitlement, so as to entitle her to an award, but then finds that the actual payment made in respect of the final four weeks of employment was an overpayment. These are matters however which can be ventilated further at the postponed final hearing , which can be heard by any Employment Judge.

[11]Finally, whilst their discussions did not bear fruit at the Tribunal, the Employment Judge strongly urges the parties to resume negotiations through ACAS, failing which they are both likely to have to invest a disproportionate amount of time and effort in further preparing this claim and the response to it.

Relevant Law

[12]The sum due as payment in lieu is determined either by a relevant agreement or by reference to the statutory formula set out in regulation 14(3)(b). That relevant statutory formula is (A x B) minus C, where A is the period of leave, B is the proportion of the worker’s leave year which expired before the termination of their employment, and C is the period of leave taken by the worker between the start of the leave year and the termination date.

[13]Regulation 13(3) explains when a worker’s leave year runs. Where there is no relevant agreement a worker’s leave year begins on the date on which their employment begins and each subsequent anniversary of that date. However, a relevant agreement can provide for the annual leave year to start on a different date.

[14]Regulation 2 defines what is meant by a relevant agreement. This is not a case where the respondent says that there is a collective agreement or a workforce agreement, therefore “relevant agreement” for the purposes of this case means “any agreement in writing which is legally enforceable as between the worker and his employer” (regulation 2(1)).

[15]When calculating the rate of a week’s pay in respect of periods of periods of leave regulation 16 says that sections 221 of 224 of the Employment Rights Act 1996 (“ERA”) apply. The provisions set out how a week’s pay is calculated depending on the kind of payment pattern a worker has.

[16]Section 224 ERA applies where there are employees with no normal working hours. It says the amount of a week’s pay is the average weekly pay in the period of 12 weeks ending (in this case) with the termination of employment.

Findings of Fact

[17]It was agreed that the claimant had worked for the respondent as a bartender at The Barristers in Leyland. It was also agreed that her employment was from 9 October 2018 until 27 August 2019. It was agreed that her hourly rate was £7.85 per hour and it was a flat rate with no premiums paid for working weekends.

[18]It was agreed also that the claimant had not taken any holiday during her period working for the respondent. Finally, it was agreed that the respondent had paid the claimant the sum of £146.01 and that I needed to deduct that amount from any outstanding holiday pay I found the respondent owed the claimant.

[19]The rest of the facts of the case were fiercely disputed.

[20]Put very briefly, the respondent’s case is that the claimant on 9 August 2019 had signed a five page document which included a section on “annual holidays”. That section (page 66 of the Bundle) says that, “The holiday year runs from 1 August to 31 July”. It also says, “Any holidays not taken before the end of the year cannot be carried over. If you don’t use them you lose them”.

[21]There is no signature from the claimant on page 66. However, she had signed page 67 on 9 August 2019.

[22]The claimant's evidence was that page 67 was a one page Equal Opportunities Policy which had been in a plastic wallet on a corkboard at The Barristers pub. She said that her manager, Mr Protheroe, had asked her to sign it. She said she had not seen the document at p.67 until it was produced by the respondent in the Tribunal proceedings (i.e. after her employment had terminated).

[23]The respondent says that page 67 was the last of a five page pack of documents (pages 63-67). That bundle included a “workplace alcohol and drugs policy” (pages 63-65) then the page dealing with annual holidays (which also dealt with public holidays, statutory sick pay, time off for dependents and company policies and staff training), with the Equal Opportunities Policy being on page 67. The respondent’s case, in summary, was that by signing on page 67 the claimant had also implicitly agreed to the annual holiday provision set out on page 66.

[24]Written in handwriting on documents 63-67 was “Pack 1” followed by “page 1 of 5, page 2 of 5” etc. Mr Miller’s evidence was that this supported the fact that those documents were altogether in one pack.

[25]The claimant's evidence was that she had not signed any documents other than the Equal Opportunities Policy. Mr Miller said she was lying. He said that he had a number of examples of other policies which she had signed. He had to accept, however, that they were not in the Bundle. Mr Miller said that he could not find a copy of the contract of employment signed by the claimant. The claimant's evidence was that she had never signed one.

[26]The claimant also denied that she had received any training or attended any staff meetings (something which Mr Cottam’s written statement on page 71 suggested).

[27]Mr Miller gave evidence about the various policies which members of staff had to sign when they began working for the respondent. He also explained the number of policies which he had to ensure as the owner of the business wee adhered to. That included not only policies relating to ensuring that there was no underage drinking (Challenge 25) but also policies relating to such things as manual handling and signing in/signing out.

[28]Although Mr Cottam did not attend I took into account his written statement (p.71). It says that he covered a vast range of areas including “licensing laws, customer care, health and safety, and company rules and procedures including holidays, uniform, personal belongings, mobile phones, etc”. His statement makes no reference to an Equal Opportunities policy, which is the only document in the Bundle which the claimant has actually signed. Mr Cottam’s statement goes on to say that, “At the end of the session I always ask staff to sign to acknowledge that they have understood all the session…I can confirm that Zoe along with other staff signed to confirm they understood everything and had no questions or queries”. The document actually signed by the claimant at page 67 simply does not marry up with that statement. The signatures are in a box underneath a brief paragraph which is about the equal opportunities policy. It makes no reference to any other policies and does not, for example, include a statement that by signing the employee is signing to indicate that they have agreed the other policies or procedures.

[29]In terms of the documents, the wording of page 67 also does not seem to me to be consistent with it being part of a pack with pages 63-66. It refers to “This policy” (i.e. singular not plural) applies equally to all staff.

[30]When it comes to the central dispute in this case, I prefer the claimant’s evidence. I find (as she accepted) that she did sign the Equal Opportunities policy (page 67) but that when she signed, it was not part of a bigger pack which included the document at page 66 which covers annual holidays. I prefer her evidence that it was a single page document in a plastic folder on the corkboard at the pub. I found her a credible witness.

[31]I also find that page 66 is not a legally enforceable agreement. Mr Miller accepted that he could not find the claimant’s contract of employment and he did not suggest that page 66 was an extract from that contract. He said instead that the bundle of documents at pages 63-67 were policies or guidelines.

[32]Turning to the amount of holiday pay to which the claimant was entitled, it was agreed that her hourly rate was £7.85. Unfortunately, the claimant did not have payslips covering the last 12 weeks of her employment (the period required under section 224 of ERA to calculate her week’s pay). She had (at page 38) used her net pay (i.e. the amounts actually received into her bank account) to work out a net weekly amount, which came to £201.39. Mr Miller was not in a position to agree those figures but said that he did not dispute that they were probably accurate.

[33]In her claim form, the claimant had also set out her calculation of the numbers of hours worked for each of the months from October 2018 to August 2019. Taking the hourly figures for the last three months (June 2019 to August 2019) that made a total of 347 hours which divided by 12 came to 28.9 or (rounded up) 29 hours. Based on an hourly rate of £7.85 that equates to a week’s pay of £227.65. That is a gross figure but it seems in line with the calculation of £201.39 for the net amount actually received by the claimant as set out in her calculations. Doing my best with the information available I find that the claimant’s gross week’s pay was £227.65.

[34]In terms of the leave year, I find that the leave year began on 9 October 2018. By 27 August 2019, therefore, 46 weeks and one day of that holiday year would have passed. That represents 46/52 of the claimant's weeks in that holiday year, or 0.88. Multiplied by the full year’s entitlement of 5.6 weeks that comes to 4.9 weeks. 4.9 weeks at £227.65 gives a total of £1,115.49 for the total gross entitlement in lieu of holiday of that holiday year up to the date of termination of employment. From that I need to deduct the £146.01 paid by the respondent to the claimant. That leaves a total of £969.48 payable to the claimant. That figure should be paid gross on the basis that it is the claimant rather than the respondent who will be responsible for accounting for tax in relation to it. Discussion and Conclusion (1) What was the relevant leave year for the purposes of calculating the claimant’s entitlement to pay in lieu of untaken annual leave at the date of termination of her employment on 27 August 2019?

[35]I find that the relevant leave year started on 9 October 2018, i.e. the date that the claimant started her employment with the respondent. (2) In particular, can the respondent show that there was a relevant agreement, satisfying the definition in regulation 2(1) of the Working Time Regulations, whereby the claimant’s annual leave year, in accordance with regulation 13(3), ran from 1 August to 31 July?

[36]I found that there was no relevant agreement satisfying the definition in regulation 2(1). As I have explained above, I found that the claimant did not sign the document at page 66 either in itself or as part of a five page pack of documents. Even if I am wrong about that, I find that the document at page 66 was not a legally enforceable agreement and so does not meet the definition of “relevant agreement” in regulation 2(1). That means that that document cannot legally change the start of the claimant's leave year from 9 October to 1 August. (3) If the leave year was from 1 August to 31 July, can the claimant carry over unused annual leave entitlement from one leave year to the next?

[37]This question does not arise. I have decided the leave year was from 9 October until 8 October each year. (4) What is the appropriate daily rate at which pay in lieu of annual leave should be paid?

[38]I calculated the pay based on a weekly rate rather than the daily rate because I found that more helpful in terms of working out the claimant’s holiday entitlement. As set above, I calculated that the gross weekly pay for the claimant was £227.65. (5) Has the respondent, on its own case, paid the correct sum in lieu of unused leave on termination?

[39]I have found that the respondent has not done so. Although it paid £146.01 I have found that the total due was £1,115.49 gross. That means there is a shortfall of £969.48. (6) If the respondent has overpaid, can it recoup any overpayment from any award the Tribunal may make?

[40]This question does not arise because I have found that there was no overpayment.

Summary

[41]The claimant’s claim succeeds. The basis of my decision was that I preferred the claimant's evidence that she did not sign the document at page 66. However, as I have explained at (2) above, even if I am wrong about that, the document at page 66 is not a legally enforceable agreement which meets the definition of a “relevant agreement” required by regulation 2 of the Working Time Regulations 1998.

[42]I make that point because it means that even had Mr Cottam attended to give evidence the outcome of this case would have been the same. Being told by an employer that your annual leave year starts on a certain date is not enough. Because of the importance of workers’ holiday rights, the Working Time Regulations make it clear there has to be a legally enforceable agreement (i.e. a contract) if the standard rules in the Regulations are to be varied. There was no such agreement in this case.